Walmart Article

The article I read is named “Walmart Plays Catch-Up With Amazon” by James B. Stewart from NY Times on Oct. 22nd, 2015.

Last week, Walmart announced it was significantly increasing its investment in e commerce, which was a move against Amazon. Although Walmart made the statement that e commerce was its priority at the dawn of Internet retailing in 1999, it has not acted much on it.

In 1999, Amazon only had an annual revenue of $1.6 billion vs. Walmart was about $138 billion. Compared to 15 years later in 2014, Amazon was 54 times what it was in 1999, nearly $89 billion. However Walmart was about three times what it was 15 years before, almost $486 billion, and only 2.5% came from Walmart.com. This pushed Amazon stock up by 80% this year while Walmart’s stock has dropped 30%. Amazon has surpassed Walmart in stock values.

When Walmart was still expanding through its incumbent bricks and mortar chain store, Amazon had been appealing to customers who had grown increasingly comfortable shopping on a smartphone. Also Amazon even beat Walmart in prices. By comparing 5 items from different categories, Amazon’s prices were lower on every item. In terms of delivery, Amazon was again superior to Walmart in both costs and time.

Walmart has been rapidly building up its tech prowess, and it has committed to investing an additional $2 billion over the next two years. But Prof. Greenwald disagreed with its strategy by stating that Walmart is not a technology company. It should teamed up with an existing technology company that already has the analytics and cloud computing capacity rather than try to build its own. Also Walmart is very good at moving trucks into the store. But in terms of delivering individual items to consumers will be a different story.

Lastly, everyone agreed the Walmart does not have much choice, given that e commerce sales continue to grow as a percentage of total retail sales.